Industry Updates

Invesco US energy ETF capping limits relaxed by Morningstar

Capping limit of the largest security is now 20%

Theo Andrew

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Invesco has seen the capping limits relaxed on its US energy infrastructure ETF by index provider Morningstar due to the concentration of securities.

During its recent reconstitution on 24 June, the $302m Invesco Morningstar US Energy Infrastructure MLP UCITS ETF (MLPS) switched from a 5-10-55 capping constraint to a 5-13-55 capping limit.

The move means the largest company in the index will see its capping limit raised from to 20%, or 35% “in exceptional market circumstances”.

Morningstar said the move was to ensure the intended index objectives are in line with the methodology.

Following the reconstitution, Energy Transfer has a weighting of 13.4%, with the stock having risen by 27.3% over the past 12 months.

This is followed by Enterprise Product Partners (11.4%) and MPLX COM (7.2%).

Energy infrastructure is still considered an integral part of the future of global energy, despite a pivot towards renewable energy in recent years.

MLPS has returned 28.9% over the past year and is 53.2% up over the past five years.

The ETF is the largest US energy infrastructure ETF in Europe, with a total expense ratio (TER) of 0.50%.

Last October, Legal & General Investment Management merged its US energy infrastructure ETF with HANetf’s Alerian Midstream Energy Dividend UCITS ETF (MMLP).

MMLP has a TER of 0.40% and $56m AUM.

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